Abacus Daily Debt News

Debt hierarchy confusing, expert says

Debtors have been left feeling angry and cheated by the way the repayments process is handled by creditors, according to new research.

Findings from a study conducted by moneysupermarket.com have revealed that the majority of those with credit cards are unaware that most providers operate on a negative payment hierarchy basis, with the cheapest debt being cleared first.

When this fact was made clear to respondents, 37 per cent stated they felt cheated, while 29 per cent became angry. A further 17 per cent were confused about the process, while seven per cent of borrowers admitted to being worried.

Site editor with the company Clare Francis remarked that many customers "end up paying more than they should in interest" because of this misunderstanding.

In other news, it was recently suggested by talkaboutdebt.co.uk that debt management problems can affect people’s ability to work, with 29 per cent of those in financial trouble having to keep out of work for a period of up to six months.

By Sarah Adie